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Jun 29, 2023

Gap Inc. Teams with UPS

Gap Inc. has called in a new partner to beef up its logistics and fulfillment

Gap Inc. has called in a new partner to beef up its logistics and fulfillment services and enable more brands to outsource their warehousing capabilities.

The retailer's recently created GPS Platform Services is teaming with Ware2Go, a UPS-owned digital platform that matches merchants with on-demand available warehouse space and fulfillment services.

The collaboration gives "even the smallest" businesses access to enterprise-level supply chain capabilities through an asset-light co-warehousing solution.

Ware2Go and GPS Platform Services will now offer SMBs access to more fulfillment centers, where advanced technology, automation and robotics can deliver a scalable network that provides as fast as one-day click-to-door fulfillment.

With a combined footprint of over 35 warehouses and distribution centers, as well as advanced machine learning and data science capabilities, Ware2Go and GPS Platform Services help apparel and footwear companies focus their energy on areas such as marketing and product development, instead of logistics and fulfillment.

The partnership also targets international companies seeking to launch in the U.S. that aren't familiar with local industrial real estate.

"This collaboration between Ware2Go and GPS Platform Services is the next chapter in the longstanding relationship between Gap Inc. and UPS," said Kevin Kuntz, head of global logistics fulfillment at Gap Inc. in a statement. "We have a deep shared history and decades-long partnership anchored in customer focus and commitment to innovation. Together we will help SMBs grow their brands with our combined logistics infrastructure and cutting-edge automation."

The team-up with the Athleta and Old Navy parent comes mere weeks after the on-demand fulfillment and warehousing company released its 2023 Future of Fulfillment study, which surveyed 1,000 U.S. SMBs earning between $750,000 to $100 million in revenue.

The research illustrated that SMBs are getting more comfortable with the idea of moving away from owned warehouses, instead toward co-warehousing partnerships. In a co-warehousing model, merchants can share resources, whether it be space, labor, advanced robotics or other forms of automation.

According to Ware2Go, 74 percent of SMBs believe the future of fulfillment is shared co-warehousing models that can allow the businesses to more easily scale. As many as 90 percent say they would be open to the idea of sharing a warehouse with another retail brand and outsourcing fulfillment to that retailer as a partner.

While 89 percent of respondents reported that they currently own and operate at least one warehouse, nearly half (47 percent) have explored more flexible warehouse strategies over the last two years. They cite cost savings (60 percent), reduced time spent on operations, and access to better technology as the top benefits they see from a shared warehousing model.

More SMBs are taking the plunge, the study says, as 65 percent are actively planning over the next one to two years to make either short- or long-term investments to expand leased warehousing space.

"The future of fulfillment looks like SMBs owning zero warehouses. Our merchants want to remain focused on growing their business and product portfolios, and not worry about the ins-and-outs of their inventory placement or building up a labor workforce to support peak season," said Steve Denton, CEO of Ware2Go. "This collaboration makes it easier than ever before for SMBs to outsource their fulfillment while still accessing incredible customer support and deep transparency into their inventory placements and delivery times."

Leveraging Ware2Go, sellers can position products closer to their customers, ideally without the need to research more providers or make long-term volume and time commitments.

When adding Gap's logistics and fulfillment services on top of that, merchants can gain access to offerings that include e-commerce fulfillment, integration with Shopify and Amazon among other commerce platforms, warehouse storage, packaging, reverse logistics and next- or two-day shipping.

The specialty retailer's foray into these services came less than a year after American Eagle Outfitters (AEO) entered the logistics space in developing the Quiet Platforms business. Some of the retailers and brands that leverage AEO's warehousing network include American Eagle, Aerie, Birdies, Outdoor Voices, Steve Madden and Saks Off Fifth.

At the Manifest logistics conference this week, Shekar Natarajan, AEO's executive vice president and chief supply chain officer, said that the launch of smaller-scale warehouses in seven U.S. markets improved inventory regionalization from 23 percent to 63 percent, ultimately shrinking transport costs by an average of more than $1 per package.

Both the cost efficiencies and the network consolidation serve as major benefits to brands seeking a faster, cheaper supply chain—giving a business like Gap Inc. even more incentive to enter partnerships with companies like Ware2Go, which can give both GPS and its partner brands access to more warehouse space.

Companies like Gap and AEO are taking cues from industry leaders. Amazon's popular Fulfillment by Amazon (FBA) service offers sellers in the company's marketplace access to a network of more than 200 million square feet of warehouse space that allows for delivery and package tracking among other services to fill an online order.

And while FBA is exclusively for Amazon sellers, Walmart is trying to be a services provider for retail businesses with the launch of B2B delivery service GoLocal. The retail giant does also offer its own initiative that is similar to FBA, called Walmart Fulfillment Services.

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